News

Bitcoin made winning headlines after Trump’s election win, only to end the first quarter of 2025 in the red. From the start of 2025, Bitcoin registered a shakiness, weighed down by speculation that the Fed may have limited scope for further interest rate cuts (read: Top ETF Stories of Q1 2025).

In early March, there was an executive order by Donald Trump to establish a strategic Bitcoin reserve for the United States. The reserve will be funded using Bitcoin seized in criminal and civil forfeiture cases, with no plans for the U.S. government to purchase additional Bitcoin at this time. Investors found the move underwhelming.

The recent market volatility and a broader risk-off environment due to Trump trade tensions have triggered a pullback of over 25% in Bitcoin from its all-time high of $109,000 reached in 2024. Overall, bitcoin is down over 13% so far this year (as of April 10, 2025). Despite this downturn, many investors view this as a buying opportunity.

Is Bitcoin Offering Safer Exposure?

SPDR S&P 500 ETF Trust SPY has lost 5.6% over the past month and has added only 0.2% over the past week (as of April 10, 2025). Meanwhile, Bitcoin has gained 2.1% over the past month and advanced 3.7% over the past week. It shows that Bitcoin has been displaying strong resilience amid the tariff-led market turmoil.

Fed Chair Powell labeled Bitcoin as “virtual and digital gold,” while billionaire investor Ray Dalio advised people to invest in hard assets like gold and Bitcoin to avoid the effect of a looming debt crisis (read: Is Bitcoin the Digital Gold? ETFs in Focus).

Does Bitcoin Perform Well Amid Inflation?

Bitcoin is often touted as a hedge against inflation and has a fixed supply. This move contrasts with traditional fiat currencies, which central banks can issue in unlimited quantities. Thus, in times of inflation, the value of fiat currencies tends to fall.

Meanwhile, Bitcoin can preserve wealth amid high inflation due to its limited supply. In any case, Trump’s high import tariff imposition is expected to stoke inflation globally. Thus, Bitcoin should do well in a such an inflationary environment.

Growing Institutional and Corporate Adoption

While MicroStrategy MSTR has long been the poster child for corporate Bitcoin adoption, it’s no longer alone. GameStop GME, Semler Scientific and Rumble RUM have recently begun accumulating Bitcoin as part of their balance sheet strategies. These new entrants are likely to strengthen institutional adoption, creating the prevailing buying pressure in the market.

Rate Cuts Could Be on the Horizon

Although Fed Chair Jerome Powell recently adopted a less-dovish tone, citing concerns about tariff-driven inflation and hesitating to commit to rate cuts, things could turn out to be more dovish in reality. If the U.S. economy slows due to the trade war, the Fed may be compelled to cut rates more quickly than previously expected. Lower rates normally favor risk-on assets like Bitcoin by reducing the opportunity cost of holding non-yielding assets.

Technical Strength

iShares Bitcoin Trust ETF IBIT closed at $45.17 on April 10, 2025. The ETF has a 200-Day Moving Average (MA) of 44.66, while its 50-day moving average (MA) is 50.45. When the 50-day MA is above the 200-day MA, it typically indicates a long-term uptrend .

Bottom Line

Despite short-term uncertainty, Bitcoin’s technical setup, corporate adoption trends, macroeconomic backdrop, and inflation-hedging characteristics suggest that the current situation may offer a favorable entry.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

GameStop Corp. (GME) : Free Stock Analysis Report

SPDR S&P 500 ETF (SPY): ETF Research Reports

MicroStrategy Incorporated (MSTR) : Free Stock Analysis Report

Rumble Inc. (RUM) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research